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California law generally uses the ABC test to distinguish between employees and independent contractors. This test looks past any contractual provisions between the company and the worker that define the worker's status.
Traditionally, independent contractors in California have the rights to decide when and where they work, set their own fees, have multiple clients, have their own tools/materials, provide skills or expertise that is not part of a company's usual repertoire, etc.
A Guide on How to Hire an Independent Contractor in California. Review Nature of Proposed Project for Consultant. Collect W-9 From Independent Contractor. Execute Independent Contracting Agreement. Optional Items you May Want/Need to do for Your Independent Contractor. Pre-relationship Non-Disclosure Agreement.
AB 5 requires the application of the ?ABC test? to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders.
California law allows civil penalties to be charged to employers that intentionally misclassify workers. The fine can range between $5,000 and $15,000 per violation, and if there is a pattern of willful misclassification, the courts can fine employers an additional $10,000 to $25,000.
A new city ordinance in Los Angeles will take effect on July 1, 2023, which requires a written contract for many independent contractors and freelance workers who work in the city. This ordinance, known as the Freelance Worker Protection Ordinance, is similar to requirements in New York City, Minneapolis, and Seattle.
California's wage and hour laws (e.g., minimum wage, overtime, meal periods and rest breaks, etc.), workplace safety laws, and retaliation laws protect employees, but not independent contractors.